Robert McWhirter, president of Selective Asset Management
Focus: Canadian dividend and small-cap industrials, technology and healthcare stocks

MARKET OUTLOOK

Financial Times columnist Michael Mackenzie recently said that while the rebound in equities and commodities such as oil suggests further gains this year, the amounts of negative-yielding government bonds globally shows less investor confidence in the economy and central banks. I believe the U.S and China will resolve their trade dispute and world economic growth will improve in the second half of 2019.

In support of the things-will-get-better camp, JPMorgan technical strategist Jason Hunter recently pointed out that the semiconductors sector seems to overlook poor fundamentals and the impact of potential policy response to said macro factors. Since Feb. 15, the PHLX Semiconductor Sector index has moved higher, closing in March 15 at a seven-month high of 1,391.44 points.

While U.S. equity markets began a consolidation/correction in the week of Feb. 25, we expect North American equity market indexes will reach new highs in the coming 12 months.

TOP PICKS

CAE (CAE.TO)

CAE provides training for civil aviation, defense, security and healthcare sectors. Earnings per share (EPS) are forecast to grow 20 per cent in the March 2020 fiscal year, giving a 17 per cent return on equity (ROE), with 9 per cent further EPS growth forecast for forward year 2021.

PARKLAND FUEL (PKI.TO)

Parkland markets fuels and lubricants on a wholesale and retail basis in North America. Net margins doubled year-over-year from 1.1 per cent to 2.2 per cent. EPS is forecast to be $1.95 for the 2019 calendar year, giving a 17 per cent.

TRANSCANADA (TRP.TO)

TransCanada operates power-generating assets and over 67,000 kilometres of pipelines in North America. EPS is forecast to be $3.95 in 2019, giving a 14.3 per cent ROE .The median earnings estimate has increased by 2.7 per cent in the past 90 days.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CAE Y Y Y
PKI N N N
TRP  N N N

 

PAST PICKS: MAY 18, 2018

 CANADIAN NATURAL RESOURCES (CNQ.TO)

  • Then: $48.16
  • Now: $37.12
  • Return: -23%
  • Total return: -21%

 TFI INTERNATIONAL (TFII.TO)

  • Then: $38.15
  • Now: $40.70
  • Return: 7%
  • Total return: 8%

 WASTE CONNECTIONS (WCN.TO)

  • Then: $96.46
  • Now: $112.66
  • Return: 17%
  • Total return: 17%

Total return average: 1%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CNQ  N N N
TFII Y Y Y
WCN Y Y Y

 

FUND PROFILE

Canadian Dividend Strategy
Performance as of: Feb 28, 2019

  • 1 month: 2.9% fund, 3.1% index
  • 1 year: -9.9% fund, 6.7% index

INDEX: TSX Composite.
Returns are net of fees, distributions and annualized.

 TOP 5 WEIGHTINGS AND HOLDINGS

  1. Aecon: 4.9%
  2. Rogers Communications: 4.8%
  3. ATCO: 4.2%
  4. Ritchie Bros Auctioneers: 4.2%
  5. Canadian Utilities: 4.2%

WEBSITE: selectiveasset.com